Only USD 40 mn used for Steel imports under Indian Credit line

The Ministry of Finance clarifying on recent media reports states that as of yesterday only USD 40 million has been utilized for the importation of steel under the Indian Credit line and that too to be used as raw material and for re-export for industries.

The Government of Sri Lanka has signed the USD one billion Credit Facility Agreement with the Government of India to facilitate Sri Lankan importers who faced many difficulties in opening Letters of Credit to import foods and other essential items due to the shortage of foreign currency in the banking system and the market.

Based on the monthly requirement and the information received from importers, the credit line was initially allocated for the importation of (a) essential food items – USD 300 million, (b) medicine – USD 200 million and (c) industrial raw materials – USD 500 million. However, this allocation was later revised to accommodate much-needed fuel and LP gas by reducing the allocation for industrial raw materials and food items. These allocations were determined considering the prevailing requirements at the time of finalizing the credit line.

The industrial raw materials include paper and printing materials, packaging materials, raw materials for the textile industry, non-carbonic chemicals, cement/clinker and raw materials for transformers, fertilizer and steel.

Industrial raw materials were considered in this credit line as these materials are required for the continuation of the ongoing important projects and export industries that will ultimately bring foreign exchange into the country.